More than 800 large companies paid no tax in 2021-22, an Australian Taxation Office (ATO) report reveals.

The ATO's ninth corporate tax transparency report, which covers 2,713 corporate entities, found that while the amount of tax collected increased due to skyrocketing mining company profits and higher oil prices, there were still 831 (31 per cent) that did not pay a cent of tax.

The report attributes no tax being paid to various reasons, including companies making an accounting loss or claiming tax offsets that reduced their tax bill to nil.

"This proportion [of nil tax paid] is similar to ASX data, which shows around 20 to 30 per cent of ASX 500 companies reporting a net loss to their shareholders in any given year," the ATO said in its report.

The 2021-22 report includes data from 2,713 entities, a net increase of 245 entities, who paid a cumulative total of $83.8 billion in income tax.

This was $15.2 billion higher — up 22 per cent — from the previous year, and almost 50 per cent higher than two years ago, the agency said.

ATO Deputy Commissioner Rebecca Saint said the significant increase in tax came from the mining sector reflecting strong commodity prices.

 

ATO deputy commissioner Rebecca Saint says there may be legitimate reasons for nil tax payable but the agency chases down those that break the law.(Supplied)

Ms Saint said the 2022 income year was the first year that the mining sector paid more tax than all other sectors combined — "something we haven't seen in the history of the corporate tax transparency report".

"In fact, the mining sector paid more tax in 2021-22 than the total tax from all sectors in each of the first three years of … reporting," Ms Saint said.

Strong economic recovery post-COVID saw tax collections rise

Australia's large taxpayers rebounded from COVID-19 and lockdowns and that the Tax Avoidance Taskforce has had some success in recouping revenue, Ms Saint said.

"The increase in population in the report as well as tax paid is not only a reflection of strong business conditions at the time, but also the high levels of tax compliance by most large businesses in Australia," Ms Saint said.

Since the Tax Avoidance Taskforce was set up by then-treasurer Joe Hockey in 2016, the government had collected $27.7 billion in additional tax revenue from multinational enterprises, and large public and private businesses.

In the 2022-2023 year, the ATO said it secured a record $6.4 billion of tax revenue from public and multinational businesses alone.

ATO still trying to recoup billions from multinationals 

But ABC News also asked the ATO how many companies were currently disputing the tax bills that the agency has raised against them.

d 139 companies had assessments raised against them during the 2023 financial year, to the value of $2.6 billion.

About $1.7 billion of the $2.6 billion was being disputed by 21 different taxpayers, it said, and some of the $1.7 billion had already been paid to the ATO under a 50/50 arrangement.

There are still also large amounts under dispute for past financial years:

· In terms of how much $2.3 billion worth of assessments is still in dispute from 2022, the ATO responded that "about $1.9 billion remains in dispute covering 16 different taxpayers".

· In terms of how much of $2.5 billion in assessments is in dispute from 2021, it responded that "about $1.9 billion remains in dispute covering 11 different taxpayers".

· In terms of how much of the $1.5 billion of assessments is in dispute from 2020, it said "$965 million remains in dispute covering 12 different taxpayers".

Australian companies have been more frequently going to the ATO asking for Advanced Pricing Agreements (APAs) – an agreement between the agency and the company about future taxes they are expected to pay and based on what terms.

The agency told ABC News for the 2021-22 financial year 89 APAs were in place, for the 2022-23 financial year there were 76 in place and for the 2021-22 year there were 101 in place.

Reasons why companies report 'nil' tax

The ATO is required under law to publish tax information reported to it by certain large companies each year.

This year's tax transparency report covers 2,713 corporate entities, of which:

· 1,496 are foreign-owned companies with an income of $100 million or more

· 590 are Australian public entities with an income with 100 million or more

· 627 are Australian-own resident private companies with an income of $200 million or more

The ATO notes in its report that "the data in the report is taken directly from tax returns and does not reflect any intervention or compliance work after lodgement of the returns".

The agency said the percentage of those entities that paid no income tax had decreased since the first publication of the ATO's report from 36 per cent in 2013-14 to 31 per cent in 2021-22.

"The fact that an entity pays no income tax, does not necessarily mean that they are not meeting their obligations," Ms Saint said.

"Tax is paid on profit not gross income. Even entities with large revenue streams may not make a profit for a variety of reasons.

"There are legitimate reasons why a company may pay no income tax, for example they may not have made a profit for the year or may be in the start phase of their business."

The ATO also estimates what it calls a tax gap — that is the estimated difference between what the agency expects to collect and the amount that would have been collected if every taxpayer was fully compliant with the law — and claims that this is very low. 

"The net income tax gap for large corporate groups is about 4.2 per cent or $3 billion in 2020-21," the agency said.

Total petroleum resource rent tax payable leaps off higher oil price

There are 11 entities in the 2021-22 PRRT transparency population, with total petroleum resource rent tax (PRRT) payable of almost $2 billion.

The number of entities paying PRRT increased from 10 in the previous year, and PRRT payable increased from $926 million.

The report said, "the increase in PRRT payable reflects the increased profitability of PRRT-liable companies in 2021-22, with oil prices being a key driver".

"The results must also be read against developments in the global energy market," the ATO cautioned.

"For instance, the 2020-21 result reflects energy prices recovering from a 2020 contraction, particularly for oil. The 2021-22 result is primarily attributed to energy price prices reacting to market volatility created by the Russian invasion of Ukraine."

The ATO's report currently includes Australian public and foreign-owned corporate tax entities with total income of $100 million or more, Australian-owned resident private companies with total income of $200 million or more and entities that have petroleum resource rent tax payable.

But recent changes to the law will see Australian-owned resident private companies with $100 million or more in income being required to report from 2024 and onwards, meaning there will be a significant increase of private entities included in the report expected in future years.